Internet ‘bubbles’ compared: This time, there’s revenue

Flickr photo via Justin D. Miller

There’s been a lot of chatter in recent months about whether the valuations of Internet companies are out of whack. I tend to agree with those observers who say things are different than the boom times of the late 90s, not only due to the fact that the new-generation of Internet companies have real revenue but also because the vast majority of Americans are not participating in this run-up.

But, what do the numbers say? IPO Dashboards offers a fascinating inside look, comparing Web 1.0 companies like Kozmo.com, Pets.com and InfoSpace to newbies such as Groupon, LinkedIn and Zillow.

“Most companies today have yearly revenues in the hundreds of millions and a couple are actually profitable,” writes Daniel Hom of IPO Dashboards. “They’re also much less expensive given the amount of revenue they produce (Enterprise Value/Revenue) and actually have a positive cash flow from their operating activities.”

But Hom also offers this warning: “Of course, we might just be in a bubble that looks incredibly different from the last one. It’s tough to say whether companies like Groupon, Pandora and Facebook have long-term sustainable business models. We’ll just have to wait-and-see.”

Here’s a look at the chart regarding revenue. (Click on chart for interactive version):